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Saturday, January 16, 2010

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Deep down, we all know that the sun is the source of life. Without the energy from the sun, our civilization would quickly come to an end. The sun, sunspots and their related burst of additional energy which actually have a cooling effect by creating more clouds, and of course gravity affect us greatly. when the sun goes away in a Solar Eclipse, we all freak out a little.

An eclipse is always accompanied by a full or no moon. Eclipse is when everything lines up. Either the moon is between the earth and sun, with gravitational forces being added, or the moon is opposite the sun with the Earth in the middle, with gravitational forces subtracting.

When massive plates of the earth crust move around and build up energy all they may need is a little more pull in one direction to set off an earthquake.

We just had a devastating earthquake and an important eclipse.

By the way...we have had a very low period of sunspots, a record level "minimum". It surprised the NASA scientists who were completely off the mark in their predictions.

You heard it here first....get ready for global cooling as the sunspot cycle kicks up, if it does kick up. There are periods in history in which it changes greatly. Yes, we may be effecting heat gain due to atmospheric conditions caused by burning fossil fuels. Which factor will be more important?

BUT LETS NOT GET CARRIED AWAY
An "eclipse season" occurs about every 173 days, and contains 2 or 3 eclipses (combined lunar and solar). For 1993 through 2020 inclusive, there are about 59 eclipse seasons, and the following ones have 3 eclipses. So about 8 out of 59 (14%) eclipse seasons have 3 eclipses, or about 8 times in 28 years (an average of once every 3.5 years). The probability of having three eclipses within a month is 14%.

But keep in mind something....we are all attached at the mind. It is related to why we move in herds. You can choose to not believe this at your own risk. When disaster strikes an area like Haiti, its effect spread throughout the world. Triples allow the chance for multiple disasters. The old "push me pull me" effect on the earth can create chaos. That affects the overall world social mood, and that affects the herd behavior of the stock market.

The complex nature of the human brain and mind, the ability to peer into space and solve the root causes of physics effects, and the ability to dissect our own DNA, does not jive well with our self-benefit animalistic hard wired tendencies. It makes for all kinds of crazy behavior as we try to convince ourselves that we are above the other animals in a manner of type, and not a manner of degree. And then small lies turn into big lies as we try to protect our most important but most vulnerable asset, our ego.

However, all that said, a couple hundred million a day of government intervention in buying futures on the stock market to ramp it up, it an effective way to negate the reality of the situation. But when the chips come down, and herd starts to run, all that intervention will only have served to make the problem worse and the run for the exits even more damaging.

As I said we have just experienced a period of VERY low sunspots. This affect us humans in a number of ways, one of which is thermal energy.

Check out this 10 Minute Financial History of the US, to support the Sunspot Chart

This is supposedly the longest eclipse in 1000 years - not verified, and even I said it was "verified" would you believe me? hehe.

I did some prior studies of eclipses and market reactions. I think they are kind of like new moons and full moons....an increase in volatility, but hard to say which direction of movement.

Eclipses do tend to freak animals out though, and humans are animals. We think the human doth protest too much when they try to drive a massive dividing line between characteristics of humans and that of other animals.

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The consumer is not consuming. The consumer is 70% of GDP. The consumer is being crushed by high unemployment, high energy prices (often the precursor to a recession), and crushed under the financial and emotional weight of housing loans that are underwater and resetting, becoming even more expensive.

Things go in cycles, that have repeatable but not totally predictable time durations. Multiple cycles overlap over each other, with the prime cycle providing the big moves.

Trying to fight these cycles just end up wasting ammunition. The current administration appears to think that we can just erase cycles and make them go away. They are wasting ammunition (our tax money).

Volcker was the last "real" economist. He made the US take some bitter medicine, with high interest rates. Bernancke was selected because his playbook was well known and the powers that be knew that they would be able to predict and control this academic. They will suceed in blowing up the financial system and main street, and then their banker friends can buy up all of the assets in world on the cheap.

This is like some bad James Bond flick, except it is us living inside this broken clock.

A reader submitted a link to the picture below showing housing resets. I was also reading somewhere else that the reset rate was actually accelerating forward in time....i.e. the SIGTHTF sooner than expected. I will try to find that one.

The chart right below is from Credit Suisse and then further adapted by the famous King of the SSRs, Molecool of Evil Speculator.

Friday, January 15, 2010

After EWI "re-issued" their "full tilt bear" alert, I expect this drop to be gamed, AGAIN.

They are funny, since in their last letter, they imply that at some point they had cancelled their prior "Go 200% Short" alarm. They never did. If you followed that trade you would have lost between 8% and 20% of your total trade. And then they state that if you had $1M net worth, and went 200% short with $20,000, then your losses would be minimal.

If you only have $20,000 to trade with....it would be rediculous to spend the EWI monthly fees. This doesn't all fit together. Great Chartists, terrible traders, and too popular, THEY GET GAMED!!!!!

But the problem is that they lie and deceive, but then again, who doesn't? Truth benefits the recipient, not the giver.

Chart of Chart does not lie, nor does it get gamed. And if I doubled the cost, it will still be a bargain.

ONLY you are responsible for your trade decisions. Get it? If you rely on others....almost a guaranteed path to failure.

Did you ever stop to think that P3 is almost the same as PPT Plunge Protection Team. In this brave new world of GovSpeak meaning the exact opposite, that seems especially amusing. Easy money, like another crack hit of liquidity, is guaranteed to eventually end up as a massive plunge.

I will also continue work on my own GUT theory for Elliot Wave and how it makes sense and ties together everything from an evolutionary perspective. My goal is to be able to sum it all up in 2 paragraphs for you low attention span Stainless Steel Rats (SSRs)

Also, looking for any feedback to improve this blog....comment please.

I have been short on charts lately, just no time, and not willing to go long in this environment, also not willing to go short quite yet. Holding some core long term short positions and many month options.

I will consider doing some guest posts.

PRSGuitars has allowed me to use his 133% channel theory and publish data. I have not had time to put this together, but he does some awesome charts.

Thursday, January 14, 2010

Seriously....slamming real work left and right. Be glad to take people's money while they feel rich and rich confident. But alot of my customers are actually bearish....they want to invest now to avoid future energy cost inflation.

One customer says...really....gold, guns, PV, and as much debt as I can have that I can pay back later with worthless dollars. I cannot find any flaw in his logic. However -- not silly debt, invest in hard assets and assets that can generate a future cash flow. It is really quite simple. There is so much drama in the world, we tend to over-complicate things.

Monday, January 11, 2010

So, after expiry, a 3 day holiday ensues. And not to get all Astro-Freaky on you, but Thursday is a new moon.

All the BEGINNING of a VIX sell signal started today, we need 2 more days of confirmation. Keep an eye on this one. So many burnt bears are so skittish, they won't have the guts to short (or the money).

And finally, look at banks. Wow. Maybe the blank check to fannie and freddie helped this out. Courtesy of the US taxpayer.

All 3 crossovers show bullish.
There are a goodly amount of stocks ready to breakout, at least earlier in the week. Friday saw that number drop.

Of those ready to breakout, about 2/3 are normally bullish patterns, about 1/3 bearish.

The heat map basically says....do nothing. If in bullish positions, no need to sell them off.

There are a few double tops and double bottoms, which are some of the best performing patterns.

Last year, stocks were really moving in accord with moon phase, but that can be strictly coincidence, then they broke that trend as the permanently increasing price "government policy" went into affect.

This Thursday is a new moon.

Funny, also how no one is even talking about this being options expiration week. And last week was very small changes in the NYSE McClennan oscillator, 3 in a row, which is unheard of.

Who knows, maybe "they" ramp this thing up 8% in 3 days....that would disembowel the few remaining bears, and then you could sell their livers to the Chinese and get some of that copper back.

I was doing a pre-construction inspection this last weekend at a clients house. The wife had 2 ladies visiting, and they were selling financial products of various sorts.

As I walked by the door I heard one of them implore....why don't you put some money into the stock market, everything is "on sale".

The real unemployment:

But Obama, will create 17,000 green jobs as a cost of $2.3B, at a cost of $135,000 per job.

So freakin' stupid....just give businesses interest free loans (and families for that matter) so they can do their own reneweable energy systems.

The money will be spent responsibly. If they default, the equipment becomes the government's who can sell it off or lease to someone else, or whatever. C'mon, at least let a portion of the market work normally.

I got some harassment from a blogger stating that supporting renewable energy is a waste of money, since reneweable energy is expensive compared to oil or coal. The point----what is the true cost of oil and it's byproducts. By products such as the 20 YO soldier flying home in a body bag, or the massive CO2 or mercury being released into the atmosphere. What is the true cost of oil and coal?

I am thinking this will be gamed like the last earnings....very low expectations, and "beating the expectations". This could very well be seen as bullish.

Alcoa seems to always go first, and there is no exception this time around. Earning could look pretty good.

China has been stockpiling boatloads of materials (literally), trading their USD for hard assets before Timothy "hyperinflation" Geitner defaults on the US debt by printing ad naeseum, devaluing the USD by say 50%. Copper is way up in price, even though housing starts are way down, and housing accounts for 40% of the copper demand.

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I created this blog to record my personal, subjective observations about the markets, solely for my entertainment and that of interested readers and to foster research. Nothing on this blog should be construed as financial advice or an offer or recommendation to purchase or sell any security. I encourage anyone interested in the markets to do your own homework and/or consult a professional advisor. I am not a certified financial advisor and am still refining my trading system. I reserve the right to modify or stop publishing aspects of my system at any time. My system has resulted in very large drawdowns in some trades. Past backtested and real-time results are no guarantee of future performance. I will not be liable for any losses or damages of any kind that result from the content of this site. Although I consider the data, calculations and information on this blog to be reliable, I can't make any guarantees and won't be held liable or responsible for anything erroneous on this website. You are solely responsible for implementing safeguards of your data and system when you use this site and its content and links. It is up to the user of this site and content to protect yourself from worms, trojan horses, viruses and the like. I may hold positions in some of the securities mentioned in this blog. Nothing in this BLOG or referenced documents is intended to be investment advice. Each person should consult a trusted investment counselor and/or financial advisor. All investments and trading carry risk, which in the current environment can be extremely substantial, especially if you use leveraged instruments such as 2X , 3X, options, or futures.